Former Mossad chief Efraim Halevy on Sunday called on the West to have a dialogue with Iran amid denials of reported talks between the US and Tehran over the Islamic Republic's nuclear program.

“I realized that dialogue with an enemy is essential. There is nothing to lose," Halevy said in an interview with US website Al Monitor.

"The claim was, if you talk to them, you legitimize them. But by not talking to them, you don't delegitimate them," he continued.

On Sunday, Prime Minister Binyamin Netanyahu denied knowledge of an agreement in principle for direct talks between the US and Iran.

In a story over the weekend, swiftly denied by both Washington and Tehran, The New York Times reported that the two countries agreed in principle to one-on-one negotiations. According to the report, the Iranians want the talks to wait until after the November 6 US presidential election.

The report said that the agreement was the result of intense, secret exchanges between the two sides dating back to almost the beginning of the Obama presidency.

Speaking to Israel Radio on Monday, Halevy added that direct talks with Iran would not necessarily mean removing the sanctions. "The goal of the sanctions is not to lay the groundwork for military actions, but to convince the Iranian leadership to abandon its nuclear program," Halevy said.

Halevy criticized Republican US presidential candidate Mitt Romney's foreign policy, asserting to Israel Radio that Romney's policy leaves no room for negotiations and makes military action the only choice.

The former Mossad chief also praised US President Barack Obama's tightening sanctions on Iran, saying Tehran now faces a severe economic crisis.